tv Nightly Business Report PBS May 24, 2012 7:00pm-7:30pm PDT
>> this is n.b.r. >> tom: good evening. i'm tom hudson. susie is off tonight. a quiet shareholders meeting for goldman sachs, the bank "occupy" protestors love to hate. worries continue building about europe as a key reading on business activity shows the euro-zone's recession is getting worse. and tonight's "made in america"- - we head to silicon valley to meet the brothers behind games like cordy and sleepy jack. that and more tonight on nbr! this annual meeting season has been a noisy one for some banks. there were vocal protests outside meetings at bank of america and wells fargo. goldman sachs may have had a tumultuous year, and a sagging stock price, but its annual meeting was a quiet affair. some occupy wall street protestors braved the new jersey rain outside the event, but
shareholders sided with the company on every issue. erika miller reports. >> reporter: dozens of occupy wall street protestors did come to the goldman sachs annual meeting in jersey city, new jersey. but most were forced to seek shelter from torrential rains. inside, the event was also subdued. shareholders approved all ten nominated directors, including michele burns, who came under fire for her role on wal-mart's audit committee. despite the controversies around goldman sachs, a larger percentage of shareholders supported the bank's pay plan for c.e.o. lloyd blankfein, and other executives. >> goldman sachs is not the only big bank holding it's meeting outside of new york city this year. j.p. morgan's was in tampa, citigroup's in dallas and morgan stanley's in purchase, new york. goldman says this year's location was not an attempt to dodge protestors, simply a sign it's as committed to new jersey as it is to new york.
erika miller, "n.b.r.," jersey city, new jersey. >> tom: even before today's meeting, goldman sachs persuaded shareholders to drop two controversial proposals. we'll have those with maquarie banking analyst ed ditmire in just a moment. >> reporter: i'm diane eastabrook in belvidere, illinois. still ahead, the future of chryser is rolling off an assembly line and heading to dealerships. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: we saw fresh evidence today showing hiring and manufacturing are picking up ever so slowly. people filing for unemployment insunce for the first time
fell by 2,000 last week to 370,000. but with the weekly average firmly below the 400,000 level, the job market continues recovering. orders for big-ticket items like computers and washing machines rose slightly in april, up two- tenths of 1%. that's coming off a big decline in march. the positive economic data helped wall street to a mixed close. the dow rose 33 points, the nasdaq fell ten, and the s&p was up nearly two points. s and required executives to pay back bonuses on certain circumstances. why do you think goldman was successful in calling down shareholders especially given its controversy the company has seen over the past year.
>> goldman itself, is why some of the governance measures would be positive for themselves or other companies. but it's a problem if you adopt these things before most of your competitors do, in that they limit your flexibility, whether it is the flexibility to compensate people to retain key talent or whether it will be giving up a nimbleness if your company's management through the c.e.o. chairman split became more cumbersome or slower reactor than some of your peers enjoyed and still is had a joint c.e.o. chairman. >> tom: still awfully competitive in the banking business. speaking of which jp mr began has been making headlines. goldman has been an sent from this controversy. did it have an opportunity here? >> well, i think goldman sachs has a well earned reputation for managing its risks and being exceptionally careful in the context of global investment bank. and so i'm sure that they
enjoy that for the first time in a couple of years. not all the negative headlines have come about here noted here. >> tom: meanwhile the share price has seen a lot of positive activity. revenue in the last quarter in almost every business was down. what dow make of the stock of goldman sachs and its business prospects. >> well, i think in the longer-term, institutional trading in particular over-the-counter, fixed income and swap and commodity trading, real structural headlines from regulatory reform in the post crisis era. business will be more transparent, more competitive. and have higher capital costs and all those things are headway force goldman sachs, even if it is able to outcompete peers and adjust better to its competitors, all these new dynamics. on the other hand some of the stock probably did-- concerned about the building tensions in europe, and what the confusion effect cobs of the european debt crisis, something much more short term and less
hedging on those longer-term business head winds. >> tom: dow own any goldman yourself? >> no, i don't tez ed ditmire with us, a research analyst at macarea -- mcquarrie research. >> tom: more signs today the economic slide in europe is gathering force. a broad measure of manufacturing and services activity saw its sharpest fall in three years. that euro-zone purchasing managers index report came out after european leaders wrapped up an informal meeting over greece with mixed results, as darren gersh explains. >> reporter: if it sounds like european leaders are sending conflicting messages, that's
because they are. after a long meeting last night, european leaders let it be known they are making plans just in case greece leaves the euro. but the leaders stressed, they want greece to stay in the euro. the real message here is to greek voters who go to the polls on june 17th. the goal is to ratchet up pressure on greeks to stick with their commitment to revamp their debt-ridden economy. and to do that, european leaders are enlisting some help from investors. >> essentially, the europeans are counting on market and retail depositor panic, if you like, to bring forward the cost of a potential greek exit to before the election happens in order to affect the outcome. >> reporter: while lots of work is going on behind the scenes to prepare for the worst, don't count on european leaders making any big moves before the greeks vote. darren gersh, "n.b.r.," washington.
is it prudent for europe to be planning for -- greece to leave the youreau even if it may not at this point. >> i think it's more than prudent. the likely hoods that greece will leave the euro is very high and i think it is a prudent course of action to be prepared. >> is there a self-fulfilling prophecy in this prudent planning, however, in that it increases ferr and possibly increases the risk of a bank run or folks pulling money out of europe and just continuing to seize that liquid thrit? >> i think there is definitely it could be a self-fulfilling prophecy and in a sense, the euro is already ending because countries are now leaving in terms-- or companies are leaving in terms of countries. they try to match liabilities, giving the same country which really destroyed the very essence of what the euro is about. however, if i am a-- company,
no plan for that contingency would be not practiced. >> tom: from a company perspective we want companies to plan for the possibility of a worst-case scenario but regulators talking about it out loud a year ago we would never have heard that are regulators are they go stock successful. can they put a firewall around greece. is the idea to save greece at this point? >> no, i think that at this point, i don't see any sense but re-- i think a lot of mistakes have been done from the winning. -- beginning. i think that greece should have defaulted two years ago when a lot of the debt-- some of the costs. they vud-- today they defaulted a couple of months ago on a fraction of the debt so this would the not provide any serious relief so it's very difficult for
greece to go ahead. i understand why they are so angry and why they are trying to sort of get out of this agreement. on the other hand, they do, the other european facials don't want to give money for nothing. so we are in a sense-- if greece-- decide that they want out of the agreement, they probably will go out. so at this point there is nothing the european union can do to sort of save greece. greece have to decide to stay by themselve . >> tom: a dire forecast. you are referring to spending cuts, to qualify for more money from the your mean colleagues. we will lee it there.
>> tom: the global auto industry could get a whole lot smaller, according the chairman and c.e.o. of chrysler group. sergio marchionne says the industry has become so competitive, he's not ruling out alliances or outright mergers with other car makers. marchionne made his remarks as chrysler launches what could be its most important product in decades. diane eastabrook has details. >> reporter: chrysler group chairman and c.e.o. sergio marchionne walked the assembly line in belvidere, illinois, thanking workers making the new dodge dart. the compact which hits showrooms next month is the first collaboration between chrysler and fiat, marrying european engineering with american design. it's also chrysler's first entry into the very lucrative small car segment in years. >> i think now we're fully competitive with the american landscape. i think we need to take it one step further and distance
ourselves from the rest of the pack one more time. >> reporter: today marked the one year anniversary of chrysler group's repayment of government loans. chrysler survived bankruptcy reorganization three years ago with help from the government and a merger with fiat. in the past year, chrysler has been on a roll, tallying month after month of sales increases in the u.s. in the first quarter of this year chrysler posted a $473 million profit, four times what it made in the same period last year. while the u.s. auto industry is improving, other regions are struggling. so, marchionne thinks within the next two to three years there will be more consolidation. >> on a very rational basis the development costs and the industrialization of some of these projects is making the economics of the car business very difficult. >> reporter: analysts say that is especially true in today's environment when consumers get bored very easily with products. >> the one that wins in this market place not only has to
offer a vehicle that is viewed as attractive to the consumer, viewed as having an all around good value to the consumer, but also has to be refreshed in the market place and that is an expensive thing for manufacturers to do. >> reporter: marchionne also said there's a fifty-fifty chance fiat with increase it's stake in chrysler sometime in july. tom. >> tom: diane, we'll be watching for that potential investment this summer. diane eastabrook in belvedere, illinois. in the "market focus," a choppy session with another late- session rally paring down earlier losses. it was push and pull between the slightly encouraging u.s. economic data and the sour tone out of europe. the s&p 500 hit its worst level of the day around 2:00 p.m. eastern time before staging a comeback to finish in the green. volume on the big board dropped to 778 million shares; nasdaq saw one and three-quarter billion shares. defensive sectors consumer
staples and health care saw buyers, as did the materials sector, but they were up less than 1%. among the material stocks moving higher, dow chemical. the global giant won a $2 billion award from the state- run chemical company in kuwait. that company cancelled a multi- billion dollar plastics joint venture with dow four years ago. shares rose more than 3% on heavier than usual volume. what was to be a $17 billion dollar plastics business was canceled during the credit crisis in 2008. the kuwaiti company said it is considering its legal options. technology stocks were the laggards. data storage equipment maker net-app pointed the finger at europe for its disappointing outlook. shares plummeted 12%. volume jumped eight-fold with the stock sinking to a new 52- week low. other data storage stocks were hit by the sour guidance.
f-5 networks fell almost 8%; e.m.c. shed almost 5%. meantime, hewlett packard shares rebounded more than 3% a day after confirming plans to cut 27,000 jobs. a number of analysts raised their price targets on the stock as h-p moves to restructure its business into higher growth areas such as data analysis and cloud computing. weaker sales in europe and the u.s. has tiffany cutting its profit forecast for the rest of the year. first quarter results trailed estimates as sales in north and south america continued what the company called a soft trend. shares were softer, falling almost 7%, although some analysts pointed out the selling may not be entirely explained by the lower outlook. italian jewelry designer elsa peretti wants to retire from her relationship with tiffany. her brand is responsible for 10% of tiffany's annual net sales. while facebook may be getting lots of attention, another online company, pandora, found
buyers after not losing as much money as feared last quarter. shares jumped more than 12%. this company went public last summer, and has seen its share price trend lower. it remains below its initial price of $16 per share. our e.f.t. market flash shows the mixed market. the nasdaq 100 and emerging market funds booked the losses, down at least a half-percent each. and that's tonight's "market focus." >> tom: it's fleet week in new york city. thousands of sailors, marines
and coast guardsmen will be in the big apple celebrating memorial day. and all this week on nbr, we've been looking at the job prospects facing america's service men and women. tens of thousands of troops are headed home from afghanistan as the u.s. winds down its war effort there. while some will stay in the military, many will be searching for civilian jobs, and the transition isn't always easy. sylvia hall takes us to a recruiting firm helping veterans tackle the challenge. >> reporter: in any military unit, anywhere in the world, you'll find a range of jobs as diverse as the people who hold them. from engineers, to supply chain managers, to chefs, nurses and lawyers, america's troops can do a lot. ra-vaire prince spent 12 years as an electrician in the navy. he's been deployed across the globe, from japan to iraq. now it's time to bring those skills home to a civilian job. it's a bigger task than you might think. that's where orion international, a military recruiting firm, comes in. >> i know there's a lot out there for me, i didn't know the
scale of what was out there for me, as far as the different types of electrical jobs that are in the market. >> reporter: he's joined more than 100 other veterans in suburban baltimore for a hiring conference, where orion links employers with qualified job seekers from the military. each candidate here has about six job interviews. the challenge in those interviews is to take a resume full of military experience and help corporate employers understand what it all means. >> some of the challenges that i've found while looking on my own were a lot of civilian companies that don't have a lot of interaction with the military. don't necessarily understand what we can bring to the table. >> reporter: the language used in the military is very different from the language used in a board room, leaving some job seekers feeling like they're translating their experience into a whole new language. so as part of recruiting, orion teaches veterans how to talk about their skills in new ways. >> most candidates have never had an interview before, they usually talk about their team, and it's very hard for them to
talk about their skills that they've acquired in the military. and it's hard for them to talk about what they did and what they are all about, as opposed to their unit or their organization. >> reporter: kevin pleasant is hiring here, and says most of the veterans do lack industry experience. but, he says the qualities they have stand out. >> the military people with their leadership, core values, even with the enlisted ranks, all the way up to the senior officers, those people have established leadership throughout their careers, and therefore they can make very good candidates within our project goals. >> reporter: the firm places up to 3,000 veterans each year, and has seen an upswing in veteran hiring lately. but as the pentagon cuts spending and more troops look for civilian work, they hope more companies will make the commitment to hiring them. sylvia hall, "n.b.r.,", anne arundel county, maryland. >> tom: tomorrow on n.b.r., vets and health care jobs. we look at cleveland clinic's efforts to recruit america's veterans.
and robert stovall is our friday "market monitor." he says investors should watch out for, possible tax increases and government spending cuts next year, and focus on rising dividends. when you think of silicon valley, the term entrepreneur probably comes to mind. but eric schurgenberg thinks this hot bed for technology start-ups should thank uncle sam in part, for its success. eric is editor-in-chief at inc. >> eric schurenberg for nightly business report the secret history of the valley silicon valley. you know the place. it's full of self-made millionaires, people who started great companies in garages and dorm rooms, and who've read atlas shrugged ten times. to them, the most powerful forces in the universe are entrepreneurship and venture capital. government's only role is to get out of the way. so, who was the valley's single most important investor in its formative years? it was uncle sam, not venture capital. the government. my source is entrepreneur and stanford professor steve blank.
as the region evolved into the hub of american entrepreneurship, he says, it was the cia and military, not private investors, who provided the seed money. at one point, says blank, they were so deeply embedded in the valley that most engineering ph. d. theses at stanford were classified. even today, the valleys third largest for-profit employer is not google, and certainly not facebook. its lockheed martin. now, this is an election year and many say we should cut spending in science research, among other things, because government investment has never built anything lasting. some saying that are from silicon valley. that's kind of ironic. i'm eric schurenberg >> tom: speaking of silicon valley, most start ups there have a common goal: be the next break-out company. in tonight's "made in america," mike hegedus introduces us to three brothers who are on that path. millions already know their products, and their success is nothing to cough at.
>> reporter: meet the brothers smith? nate, ben and tom. and if the smith brothers has a certain ring to it, well, it's because they are related to the other ones-of cough drop and elixir fame? but, what these smith brothers are known for are, video games- cordy, cordy sky, and sleepy jack-three of the most popular game apps in the digital universe, millions, multi- millions of downloads across all platforms. >> try to i have good experiences across all those. >> the ability to go from here to there, to there is a huge deal. >> yes, yeah, and that's the thing that i think we're ahead of the kufb there in terms of all of our designs.
they are the principles in eight year old silvertree media, a couple dozen folks in a downtown historic palo alto california building. they are virtual world creators and storytellers, and when you consider there are hundreds of millions of devices upon which their games will play? there is nothing sleepy about that, jack. >> we always try to think of ourselves as the pixar of the mobile industry, so we try to make things that kids will like it, but their parents will like it as well. >> if we go at these characters, that there is a life and heart to each of the characters that we're working on, and we show to the world, that people will pick up on that over time. >> reporter: this is how they got their start, creating a fairy world for disney, which led to? tron. and work for e.a. and microsoft. in 2009, they decided to launch their own stuff, but how did they get there? where does one start on this journey into virtual fame and fortune? try pittsburgh. both ben and tom are graduates of carnegie mellon's unique entertainment technology center
masters program. a combination of computer sciences, engineering and art that has given birth to perhaps more game makers and changers than any other place in the real world, and was the home of professor randy pausch, whose last lecture became a phenomenon, given just months before he died it was a viral inspiration to millions, but he was an inspiration to the smiths long before that. >> from the beginning of us starting this company he said you guys really have something here, you have something unique, and keep developing that, keep, make the best company you can possibly make. and shoot for the stars. >> reporter: shooting for the stars, they can do that. i'm mike hegedus, "n.b.r.," in palo alto, california.